Chloe Faulkner: Can anyone afford to not have an LPA?

Kate Garraway has long been a familiar face on the morning news circuit, but recently has found herself in the spotlight for more personal, and difficult, reasons. In March this year, her husband Derek Draper contracted Covid-19 and has remained very seriously ill, including a long period of time in a medically-induced coma.

In addition to the emotional toll this situation must have placed upon Garraway and her family, she has also recently spoken of the difficulties she is facing in a practical sense. She explained the ways in which dealing with general paperwork, particularly that surrounding financial matters, is becoming more and more difficult due to a lot of policies being held in her husband’s name.

Draper does not have a Power of Attorney – a document that would allow Kate to act on his behalf – in place, and therefore she will not be allowed to carry out even simple tasks, or discuss policies, on behalf of her husband.

While this is a very distressing story with it attracting much media attention and resonating with so many, it could be a useful way to open discussions with clients who are yet to fully consider their estate planning needs. A good starting point to these conversations could be the exact nature of Lasting Powers of Attorney, and why they can be so important.

A Lasting Power of Attorney, or LPA, allows an individual to appoint a third party to make decisions on their behalf when they no longer have the capacity to do so themselves. If someone doesn’t have LPAs in place and they become mentally incapacitated, their loved ones can face long delays and an onerous application to the Court of Protection to gain access to their finances and make decisions on their behalf.

During this process, assets are likely to be frozen, including joint assets, which can cause significant problems for relatives who may need to make arrangements to pay bills, or for any ongoing care needs.

Why power of attorney is all-important during the Covid-19 pandemic

There are two types of LPA; a Property and Financial Affairs LPA and a Health and Welfare LPA. The Property and Financial Affairs LPA gives attorneys the authority to look after the donor’s finances – including buying and selling property, dealing with bills, running bank accounts and investing money. The Health and Welfare LPA allows attorneys to make decisions about medical treatment, or day to day care, on behalf of the donor in the event that they become unable to make those decisions themselves.

Business owners can also create separate LPAs for their business interests, allowing them to appoint specific attorneys to look after their business affairs. This prevents personal attorneys exposing both themselves, and the business in question, to unnecessary risk.

A person’s loss of capacity can also have a direct impact on the ongoing relationship that professional advisers develop with their clients. If your client loses capacity without LPAs in place, the Court of Protection will make an order specifying who can access and manage the client’s assets and, more often than not, these orders are granted to social services.

There is no guarantee that the person appointed, or indeed social services, will have either the power or the inclination to continue to use your services. With a valid LPA, however, a client can specify that they would like their attorney to consult with you, the adviser, and continue to use your services.

Luckily, it looks as though Draper is on the road to recovery; one which I hope is both quick and full.  However, I’m very grateful to Garraway for using her influence and voice to shine a light on an area in which so many individuals are still left exposed and vulnerable, and hope it reveals why nobody can afford to be without an LPA.

Chloe Faulkner is business development manager at APS Legal & Associates – part of The SimplyBiz Group